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The paper presents preliminary results of the analysis of cost efficiency of peanut production in the South-Eastern region utilizing data from the 2001 Peanut Farm Costs and Returns Survey. Stochastic cost frontier analysis using both Cobb-Douglas and translog functional forms is used as the most suitable given data availability and the nature of the industry. Estimation results are used in a discussion of the likely farm-level effects of the 2002 Farm Act, which substituted quota support with marketing assistance loan program. Contrary to our expectations, quota ownership did not significantly affect cost efficiency, which implies that quota ownership is not a discriminating factor in considering the effects of the Farm Act. Other producer characteristics, such as farm size and operator’'s age have significant effect on cost efficiency. These findings, however, must be treated with caution, as the survey data appears to be too noisy, and the underlying assumptions may not be appropriate due to highly regulated nature of peanut production. We plan to further refine the data, as well as to use the DEA methodology which, due to its unrestricted and flexible nature, might provide more conclusive results and deeper insights.

Subject(s): Crop Production/Industries

Issue Date: 2004

Publication Type: Conference Paper/ Presentation

PURL Identifier:

Total Pages: 25

Series Statement: Selected Paper

Record appears in: American Agricultural Economics Association (AAEA) > 2004 Annual meeting, August 1-4, Denver, CO

Autor: Nadolnyak, Denis A. ; Hartarska, Valentina M. ; Fletcher, Stanley M.


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